Chinas influence grows with WB vote change

WASHINGTON - World Bank member states on Sunday supported capital increases that will provide $5.1 billion in cash and enhance Chinas clout at the financial institution created after World War II to eradicate poverty. The 186 members agreed to provide $3.5 billion to the banks unit that lends to governments, the first general increase in 22 years. Another $1.6 billion from developing nations will boost their voting powers, enabling China to leapfrog countries such as Germany and Britain to become the third-largest shareholder behind the US and Japan. This package is a first for the bank - never has it attempted to change voting power while also asking for a general capital increase to boost resources, President Robert Zoellick told reporters in Washington on Sunday. The additional capital means we will be able to continue playing the role that is demanded of us. China was the biggest benefactor, its vote share rising from 2.77 percent to 4.42 percent. The massive increase was a one-time compromise that was frowned upon by a number of donor countries, said Gudrun Kopp of Germanys Development Ministry. She called for a more reliable and transparent system and a greater focus on Africa by the 2015 review. Zoellick called the capital increase a strong vote of confidence by the worlds development and finance ministers, who met in Washington to seal the deal. The extra money meant the bank no longer faced the prospect of cutting back lending this year, he said. Zoellick travelled from Tokyo to Paris in the past six months to convince shareholders his institution needed capital after stepping up aid during the financial crisis. He warned that without a pledge of support, the bank would have to reduce loans this year for projects such as road building and education. The risk of having to cut back lending no longer exists, he said yesterday. Member states endorsed a proposed new strategy, which the bank said will strengthen efficiency and accountability. Creating opportunities for growth in sectors such as agriculture and infrastructure is part of the plan, it said in a statement. A group of environmental and poverty-fighting organizations such as Africa Action and Friends of the Earth in a press release last week said they didnt support the capital increase because of the banks continued financing of dirty energy projects. Zoellick, in his press conference, put forward environmentally friendly actions taken by the bank, such as climate-investment funds. We will move people towards low-carbon growth, but we will also help build support for the climate-change negotiations, he said. The poor need energy to grow, and many countries in Sub-Saharan Africa only have 7 to 10pc of their public with electricity.